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This chart is from a Wall Street Journal story about how much money Fortune 300 companies spent to keep their CEOs safe. There's quite a swing here. In one hand you've got companies like Valero Energy, which forked over a mere $239 for monitoring fees for CEO William Klesse's home security system. At the other extreme is Limited Inc., which spent $1.25 million to protect CEO Leslie Wexner. This total reportedly includes security for Wexner's 22,371-square-foot home on a 300-acre estate and "other homes and a yacht." It also includes use of a corporate jet, which the company requires.

Well, we told you they were back in acquisition mode.
Stanley Works announced just now an agreement to acquire Sonitrol for $275 million, at the same time they announced an agreement to sell off CST/berger laser leveling and measuring business, based in West Lafayette, Indiana, to Robert Bosch Tool Corporation for $205 million. Busy, busy.
Here's the official press release (it's long and dense):
STANLEY WORKS ANNOUNCES SALE OF CST/BERGER FOR $205 MILLION AND ACQUISITION OF SONITROL CORPORATIONÃ‚Â FOR $275 MILLION
(sorry, many press releases shout and I was too lazy to retype it)
Also Plans To Prune Several Small, Non-strategic Product Lines During The Remainder Of 2008
New Britain, CT, June 11, 2008: The Stanley Works (NYSE: SWK) today announced that it has entered into an agreement to sell its CST/berger laser leveling and measuring business, based in West Lafayette, IN, to Robert Bosch Tool Corporation for $205 million.Ã‚Â This operation had 2007 revenues of $80 million (excluding certain European sales of approximately $10 million), primarily in North American construction-related markets.Ã‚Â The transaction, which has been approved by the Boards of Directors of Stanley and Bosch, is subject to regulatory approvals and other customary conditions, and is expected to close during the next several months at which time the company expects to realize a pre-tax book gain totaling $138 million.Ã‚Â Net after-tax cash proceeds from the sale are expected to approximate $155 million.
We've heard in the past Stanley is looking to get away from revenue stemming from product sales and emphasize recurring revenue.
In a separate transaction, the company also announced that it has entered into an agreement to purchase 100% of the shares of Sonitrol Corporation from an ownership group comprised of Carlyle Venture Partners, Wachovia Capital Partners and Spire Capital Partners as well as selected members of Sonitrol management for $275 million cash (approximately 10x EBITDA). Sonitrol, headquartered in Berwyn, PA, provides security monitoring services, access control and fire detection systems to commercial customers in North America via two monitoring centers and a national multi-channel distribution network. Sonitrol, the 8th largest electronic security company in the U.S., brings a strong brand, unparalleled capabilities in audio-verified monitoring and a substantial national account base to StanleyÃ¢â‚¬â„¢s Convergent Security Solutions platform.Ã‚Â Sonitrol, with revenue totaling approximately $110 million will report into StanleyÃ¢â‚¬â„¢s Convergent Security Solutions business which had 2007 revenues approaching $600 million.Ã‚Â The Boards of Directors of Stanley and Sonitrol have approved the transaction, which is subject to regulatory approvals and other customary conditions. The acquisition is expected to close during the third quarter of 2008.
Have to admit I just read that Sonitrol was for sale on Jeff Kessler's blog, which is now a must-read, considering his in-depth knowledge of the industry and now being released from Lehman Brothers' lawyers' shackles. However, you'll notice I had this here news posted first...
John F. Lundgren, Chairman and Chief Executive Officer, commented: Ã¢â‚¬Å“These two transactions are important steps toward advancing our growth strategy and repositioning the company to be less dependent on construction and DIY markets.Ã‚Â We continue to be strongly committed to shifting the companyÃ¢â‚¬â„¢s portfolio into higher-growth, higher-return areas such as electronic security.Ã‚Â The addition of Sonitrol, with its iconic brand and strong franchisee and direct sales network, expands the scale of our existing North American monitoring operation, increases our recurring revenue and adds breadth and depth to our electronic security product offering.Ã¢â‚¬Â
Exit of Several Small, Non-Strategic Product Lines
In addition to the two transactions announced today, the company is developing plans to exit several small, non-strategic product lines during the remainder of the year with associated revenues of approximately $60 million. Assuming that these exits are accomplished through discontinuation or sale at various times throughout the year, their results will be reclassified to discontinued operations for the current and all prior periods in accordance with generally accepted accounting principles as events transpire.Ã‚Â Details of these exits will be communicated as necessary after plans are finalized and/or transactions occur.
...boring stuff...
John F. Lundgren, Chairman and Chief Executive Officer, continued: Ã¢â‚¬Å“The portfolio transformation which we embarked upon several years ago is a key element of our overall strategy and includes both acquisitions and the occasional disposition of businesses or product lines that are inconsistent with our intended direction.Ã‚Â As the portfolio reshaping has progressed, the company has become stronger and more capable of delivering sustainable earnings and cash flow growth.Ã‚Â TodayÃ¢â‚¬â„¢s announcement reinforces our firm conviction to continue with this strategy.Ã‚Â Challenging economic periods like these often present opportunities.Ã‚Â Our acquisition pipeline is robust and our ability to create value by allocating capital to acquisitive growth and/or share repurchase is strong.Ã‚Â We continue to operate the company within the boundaries of our upper-tier credit ratings, a strategy which has served us well over the years and will continue to do so. Ã¢â‚¬Å“
Additional Information About Sonitrol
Sonitrol, a market leading independent U.S. commercial security company, had 2007 revenues of approximately $110 million.Ã‚Â Sonitrol is well positioned for growth given its integrated suite of security solutions, its established brand and respected reputation and its national multi-channel distribution network.Ã‚Â Sonitrol, an industry leader in apprehension rates, maintains one of the lowest false dispatch rates in the market, and is a leader in verified audio monitoring services.
Recurring monthly revenues (Ã¢â‚¬Å“RMRÃ¢â‚¬Â) from commercial monitoring activities represents an important element of SonitrolÃ¢â‚¬â„¢s annual revenues; additional revenues are generated from security system and equipment installation, repair services, proprietary equipment sales and royalty fees generated from SonitrolÃ¢â‚¬â„¢s franchisees. A one-time installation fee (including the cost of equipment) is billed at the commencement of customer security contracts. Additionally, monthly monitoring fees are charged over the life of contracts, for which a typical initial length is five years, and service fees are generated from repairs that are not covered by warranty.
Yeah, I think Sonitrol does pretty well and did pretty well for its investors. Getting $275 million for $110 million in annual revenue isn't that far away from Stanley paying $545 million for the $200 million HSM brought (both deals are in the 2.5-2.75x annual revenue, 10-12xEBITDA, 50-60x RMR areas, with Sonitrol a touch lower than HSM in all of those categories). I'm guessing Sonitrol are similarly doing about 50 percent of their revenue in recurring and that their gross margin is somewhere around 30 percent, maybe higher.
I'll get some more on what's happening with the brand, whether HSM is going to keep the residential accounts, and what's up with the franchises soon. I'm going on a little vacation starting tomorrow, though, so it might take a bit.

Certain of us northeasterners won't exactly be crying for the New York Football Giants, now that they've had their Super Bowl rings stolen.
Ha, ha.
The thieves disabled the alarm system at E.A. Dion Inc., cut a hole in the roof and made off with a safe that weighed at least 1,000 pounds.
The loss was discovered Sunday by a Dion employee, who went to the business when she was unable to access her work e-mail from home, apparently because phone lines had been cut. The heist could have taken place at any time over the weekend, Sgt. Jim Keane said Wednesday.
Well, I don't think it was the phone lines that were carrying that employee's e-mail messages, but you get the idea. Maybe there should have been a radio back-up? How is it possible there wasn't one?
Unfortunately, only the Giant staffers got hit by this one. The players received their rings already. Bummer.
And you conspiracy theorists out there, go ahead and get started. The company is in Attleboro, Mass., which is quite possibly the single greatest concentration of Pats fans in the world. Can you say, "Inside job"?

The Texas governor's mansion was set to be retrofitted with sprinklers, but eight months into a renovation project that hadn't happened yet. No one was injured, but the mansion suffered major damage in a fire last weekend. Here's
the story The mansion was equipped with a security system, which will hopefully help apprehend the arsonist, who is said to have set the fire around 2 a.m. Sunday morning.

Normally, I'm pretty loathe to travel to Connecticut - there are more cars on the 10-mile stretch of the Mass Turnpike I have to cover than there are in the whole state of Maine - but I spent a day earlier this month at the Sargent manufacturing facilities to see the new Assa Abloy Innovation Corridor, built under the direction of Stacey Callahan, who heads up marketing for the Door Security Solutions division and is working to bring together all of the many Assa Abloy brands: Sargent, Securitron, Yale, McKinney, HES, Adams Rite, etc.
They've put together a nice facility. At the open, you get a demonstration of their evacuation products, like Beacon, which combines strobes, white noise, spoken instructions and lasers to get you to the door pretty quickly. There's also a comparison of photoluminescent vs. electroluminescent technology, which becomes quite interesting when the smoke machines get going and you can't really see a dang thing.
Then you move into the electrical access control section, and they've got a nice demonstration area for their locksets with keypads and RFID, etc. This is where the special sauce is, too, that I'm not allowed to talk about. But trust me they've got some interesting stuff to bring out in about a year.
Finally, you get the door area, which isn't the most interesting thing you've ever seen, but does at least make you think about what your doors are made from.
Then you move into a training area. Seems Assa Abloy's forays into electronic access control has led them to develop a certified dealer program, and soon training will be required before installation of its products. Looks like they've spent a few bucks to make that run smoothly.
Maybe the best thing about the tour through the corridor was the obvious pride Assa takes in its products, and the seriousness with which it takes life-safety and security. Too many manufacturers seem to be commoditizing and commercializing security and safety and it leaves a bad taste in my mouth. Not so, here.

As security measures increase for the upcoming Olympic games in China (why are they being held there again? To reward China for their great gains in granting basic human rights? No, that's not it? Something about their giant economy or something? Oh, it's just totally unclear? Swell), there comes this notice about China banning fireworks in and around Beijing.
Now, banning fireworks in Maine is one thing. We're not the brightest bunch and we can barely be trusted with sparklers. But the Chinese kind of invented fireworks and take a national pride in them:
A Chinese monk named Li Tian, who lived near the city of Liu Yang in Hunan Province, is credited with the invention of firecrackers about 1,000 years ago. The Chinese people celebrate the invention of the firecracker every April 18 by offering sacrifices to Li Tian. During the Song Dynasty, the local people established a temple to worship Li Tian.
[tangent]Anybody else send away for M-80s when they were kids and then stick them inside lego-built cars and light the wicks just as you rolled the cars off the roof so that the cars blew up into a thousand lego shards in mid-air?[/tangent]
So, in the name of security, the Chinese government are taking away the equivalent of, like, jazz music (the only enjoyable thing I can think of right now that we Americans invented). If they're really worried about keeping people safe, maybe they should stop executing 1,000 people a year.

When Tyco buys a company for $90 million, it's generally a good story for us anyway, but this bit about Tyco buying the last remaining bit of Sensormatic is pretty interesting.
I'm still looking into it, but this Winner Security company seems to have done pretty well for itself. Check out this court decision from 2005 (warning: that link goes to a pdf). Basically, it bought a Sensormatic franchise in 1977 for $66,000, then leased it back to Sensormatic for more than $6 million over 20 years, then didn't allow Sensormatic to buy the franchise back when the 20 years was up because Sensormatic missed the 90-day notice deadline by 47 days, and now finally has sold the franchise back to Tyco (which bought Sensormatic in 2001) for $90 million.
I've got to think Mr. James Winner has his face on a dart board somewhere in the Sensormatic/Tyco offices.

Industy analyst extraordinaire Jeff Kessler's got a great new blog that I know I'll find very handy and I thought you might too.
Jeff found a couple of nuggets in BHS's May 30 SEC filing that totally escaped me. Apparently Brink's Home Security will not be able to use the Brink's name three years after it spins off to become its own entity. In addition, BHS has apparently been paying royalties (more than $30 million in 2007, according to Kessler) to use the name.
More on this later.

ABI Research just released a new study reporting that the market for digital cellular transmission of alarm signals to central stations is expected to increase to 7.5 million in 2013. In 2007 digital cellular communication was at fewer than 2.5 million. That's three hundred percent growth in six years. Wow, integrators and manufacturers better be paying attention.
The report cites the Feb. 18, 2008 AMPS sunset deadline as a significant driving force for the adoption of digital cellular communication (which, if you're reading this you certainly remember as the date that the FCC allowed cellular providers to discontinue the analog portion of their service). I think the adoption of cellular transmission is a given in this day and age, but that's just because I'm of the Millennium Generation and have owned a cell phone for a large part of my adult life. However, I realize there's a lot of hesitation and concern from security providers about the reliability of cellular networks, especially as primary communication methods. There's been more than one occasion when I've received the network-is-currently-busy-or-unavailable message from my cell phone carrier, so I think security providers are rightfully insecure. However, there isn't a lot of doubt in my mind that cellular communication will not only improve but will be largely accepted by the monitoring industry. That said, it's not always the cellular provider that lies the problem. During the whole AMPS scramble, I heard a lot of complaints (off the record, of course) directed toward manufacturers who were not releasing products in time to provide installers with a solution to replace AMPS units. But, I'm sure they're paying attention now.

Remember those crack security guys who ignored alarms while invaluable national treasures were being thieved from the University of British Columbia's Anthropology Museum? Well, it wasn't their fault. Someone called up and told them to ignore the alarms. Clearly, this was heist impossible to prevent.
Four hours before the break-in on May 23, two or three key surveillance cameras at the Museum of Anthropology mysteriously went off-line.
Around the same time, a caller claiming to be from the alarm company phoned campus security, telling them there was a problem with the system and to ignore any alarms that might go off.
Campus security fell for the ruse and ignored an automated computer alert sent to them, police sources told CBC News.
Meanwhile surveillance cameras that were still operating captured poor pictures of what was going on inside the museum because of a policy to turn the lights off at night.
Wow. That's really all I've got. Wow.